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Welcome to The Boardroom Path, the essential podcast for aspiring and newly appointed Non-Executive Directors navigating the journey from executive leadership to the boardroom. Hosted by Ralph Grayson, partner at Sainty Hird & Partners, each episode offers insightful conversations with industry leaders, seasoned board directors, and governance experts. Our guests share practical strategies, valuable perspectives, and actionable advice on how to effectively transition into board roles, maximise your impact, and build a rewarding NED career.
[00:00:00] Ralph Grayson: Welcome to The Boardroom Path by Sainty Hird & Partners. I'm your host, Ralph Grayson, a partner in the board practice.
In this series, we'll offer practical steps and useful perspectives for aspiring and newly appointed NEDs. Throughout its 30 year history, Sainty Hird has recruited senior board members across the City, Industry, the Public Sector and NGOs.
We're now also evaluating those boards, as well as coaching and mentoring those seeking to transition from an executive career into the boardroom. So we'll be speaking to some leading figures in the board advisory and NED world. Specifically, we'll seek their counsel about how and where to spend time and energy to make an effective transition into the boardroom.
The goal is to equip recent and aspiring NEDs with tips, tactics and strategies to be most effective and build a successful career as a board director. In the process, we aim to help you to think more about who you are, how you operate and how you can make this work in the boardroom.
I'm delighted today to welcome Kieran Moynihan. Kieran is the managing partner of Board Excellence, a specialist board practice supporting and enabling boards of directors and individual directors in Ireland, the UK, Europe and internationally, excelling in the areas of effectiveness and performance. Kieran has over 25 years serving on boards as a CEO and an executive director, non executive director and board chair. Kieran is an internationally recognised thought leader in the area of board dynamics, effectiveness, performance and corporate governance. He's a regular contributor to leading board publications and has developed ground breaking new approaches to optimising the so called people equation of the board.
The partnership between executive and non executive board members and enabling the board to excel as a high performing team. He's the chairman and non executive director of a number of high growth, globally focused companies across sectors such as technology and health.
Providing strong support and independent strategic thinking to the overall board team and the CEO executive team. Leveraging his deep international expertise in business development, sales, finance, operations and M&A. Kieran also has a deep expertise in technology and supporting boards in key areas such as cyber security, big data, digital transformation and artificial intelligence.
Kieran, hi and welcome to London.
[00:02:46] Kieran Moynihan: Thanks very much, Ralph. Delighted to be here.
[00:02:48] Ralph Grayson: Perhaps we can start with some background on you as a Technology Founder CEO and your journey into the world of board evaluation and the advisory services that align with that and perhaps introduce yourself a little more formally.
[00:03:01] Kieran Moynihan: Thanks, Ralph. So, my name is Kieran Moynihan. I'm the managing partner of Board Excellence. By background, I'm an electrical engineer, and in the late nineties, got the entrepreneurial start up bug founded a telecommunications software company and we raised about 30 million euros investment funding from venture capitalists at the time. Had a fantastic, but very quite challenging, tough journey over the eight years. We ended up getting acquired by IBM, which is a great outcome in 2007. But the genesis of why an electrical engineer has ended up leading an international board consulting practice was laid there and that I was blessed with a fantastic board of directors.
So on my board, I had four investor nominee directors from various venture capital firms. Our lead investor was HG Capital here in London, and I had two independent non exec directors. And in terms of the six non exec directors, one was better than the other. And collectively, they were a huge factor in us making it, and that gave me a great interest in the whole areas of boards and governance and particularly how executive teams and boards work together. At the time, I was a rookie CEO, had no board experience, no governance experience, was a decent engineer, but no real serious, management,expertise, and it was a real shot to the system in some respects, having raised the investment to suddenly realize that you are now accountable to a board of directors.
From the very outset, they were quite challenging and tough, but extremely supportive. In some respects, it was like having six owls around the table, one wiser than the next, but very thoughtful and, really had a brilliant chair at the time, a fantastic gentleman called Ian Armitage, who was the CEO of HG Capital at the time.
And he was just incredible in terms of his guidance and that just gave me great interest in the area of boards. After serving for three years as a vice president in IBM, I decided to actually take a step back from the executive world and became a board chair myself for Venture Capital, a private equity backed companies based in Ireland, in various technology, in particular sectors, and in the health medical devices area as well.
Really enjoyed the chair, role, and I still do that today, 14 years on. But I suppose in that time, I just had a great, interest andprobably around 2015, 2016, a number of board investment firms and board of directors were asking me for my help and guidance.
And that was the genesis then of Board Excellence starting in 2016.
[00:05:50] Ralph Grayson: So, Board Excellence, as with all good businesses has its mission and its purpose clearly stated. Yours is empowering boards to excel in effectiveness, governance and performance. Perhaps you can just talk a little bit about what that actually means for you and a little bit more about Board Excellence in terms of type of clients you work with, the sort of missions and mandates that you're given, and how you're trying to make an impact in the boardroom.
[00:06:15] Kieran Moynihan: The key thing for us is just given the critical responsibility that the board directors collectively and individually have been entrusted with from particularly obviously the shareholders as the providers of capital, but also in quite a strong way their employees, their stakeholders, their customers, that the effectiveness, decision making, and ultimately performance of the board of directors and the executive team together, dictate the future of organizations and companies. Our key mission is to really help them be at their best, to get the best out of each other, and to truly excel for their shareholders, but also their employees, their stakeholders. We would have very much, a focus on a kind of servant leadership type model for board of directors that we set the bar really high for them in terms of how they function, their effectiveness, and ultimately the quality of their decision making, their performance.
Then in terms of how we help boardswe have kind of four areas that we focus on. The biggest area that we particularly specialize in is in external board evaluations. So that's where for a lot of companies and organizations they would have a requirement normally every three years to do a fully independent external board evaluation.
We would be known, I suppose, as a very thorough and very honest evaluator of boards and we set the bar high. We really examine the effectiveness of the board and the committees and how they work with the executive team. We look at that and assess 20 different areas and we put it all in together to give an overall assessment of the board and we're effectively doing three things in each area.
We're giving a very honest assessment of where we see the board and executive team today. We compare them with the best that we see for comparable peer type boards, if it was a FTSE or AIM company, for example. And finally, in some respects, the most important part is we lay out a set of recommendations to help them drive improvement in the board effectiveness and performance.
The second area then that we focus on is training. So we do quite a lot of training for boards of directors, for groups of directors, for groups of chairs, CEOs. We do a lot of work with founder CEOs, for example, just yesterday, I gave a workshop to 30 founder CEOs a leading international venture capital firm. And the workshop will really just help them how to work with their boards. Because it's an area founders, CEOs in particular, find quite challenging.
The third area then for us is where we do a lot of advisory services and boards and governance, helping them develop committee terms of reference, chair succession planning, board diversity planning. All different guidance on this, both the technical aspects of corporate governance, another popular area that we do quite a lot of helping the board in terms of CEO succession planning, for example.
The final area then that we provide support on is in board dispute mediation. So around the world, we mediate quite a lot of board disputes. Most of the time it's where the relationship has broken down between the executive team and the board. Trust has been broken and in many cases it's getting close to literally having to go to the courts and we often get asked to come in just to help to see can we rebuild the relationship and trust between the executive team and the board.
[00:09:55] Ralph Grayson: Fascinating.
One of the things we've dwelled on with some other guests in the past is the fact that the title NED isn't all encompassing and boards aren't generic. I know you've worked in the UK, you've worked in Europe, you've worked in Africa, I think. Whether it's public, private, Geographical domain, perhaps regulatory environment, how does that perhaps change the way you think about a board, the constituent members of the board, its mission, its purpose, its added value?
[00:10:25] Kieran Moynihan: It's a very interesting, point, Ralph, that at this stage we've helped boards in over 35 countries internationally and growing. And what's really interesting is that whether it's a publicly listed company, a charity, private equity backed company, a not for profit membership body. Ninety percent of the responsibilities of a board director are quite similar for a non executive director.
When we think about the role and responsibilities of a non executive director, we always think of in kind of two sets or buckets of responsibility. And the first kind of core foundation set of responsibilities is oversight, and governance and a key role for the non exec director individually and then collectively together is to hold the CEO and executive teams feet to the fire in their performance, their decision making, their behaviors.
That oversight and that structure and that level of accountability, that's a fundamental. With that then comes ensuring the highest standards of corporate governance, risk management, internal controls, quality of external, internal audit, et cetera.
But on that set of responsibilities then is then balanced by the responsibilities of the non exec director to actually help support and encourage the executive team. Because one of the benefits of having a board of non exec directors is you have a lot of experience around the table.
The vast majority of non exec directors were senior executives themselves. So there's a wealth of experience around the table that the executive team can tap into. And that's where you get the real, magic in a boardroom. When you get a fantastic partnership between the executive team and the non exec directors, that kind of balance, strong oversight and excellence and governance, but with a lot of value add and support to the executive team.
One of the other interesting aspects about the definition of non executive director is that they're not in the machine day to day, hour to hour. And that brings incredibly valuable independence of mind and objectivity. That when the non exec directors are sitting at the table and the CEO and the executive team are laying out some serious challenges, potential decisions that they want the board to support.
They're at this 90 hours a week, seven days a week, and they are so close to it, but sometimes they're so close that they can't see the wood from the trees. And the value of non executive directors bring in that objectivity and honesty is incredibly valuable, to help an executive team.
When you look at the role of non executive directors and how it's evolved, there was always the bias towards the first part around governance and oversight. But as the years have gone by, I think when you look at a modern board of directors now, and it doesn't matter whether it's a FTSE board or a charity board, there's a lot more expected of non exec directors.
You absolutely always need to do your job of oversight and governance because you've been entrusted, to safeguard the health of the organisation. But what distinguishes the really good non exec directors from the average is the amount of value and support they provide to the executive team.
And if you have an environment where the executive team are doing really well, And they actually welcome the board stretching them, really setting ambitious targets, obviously helping them and where needed, hauling them over the coals, giving them a dose of salts for poor performance.
That's where you get exceptional boards and executive teams together.
[00:14:11] Ralph Grayson: A lot of our listeners will be new, or aspiring NEDs.
For those who haven't been in the heat of battle in the boardroom,let's turn to what I know you talk about the iceberg of dysfunction. Why do you think so many boards struggle with their performance? And for you what are the key signs of a poor performing board?
[00:14:29] Kieran Moynihan: For me, Ralph, I always come back to that 90 percent of serious problems on impact boards are people related. There's no shortage of experience around the table. There's a lot of experience, non execs and executives with very impressive CVs.
But the reality of getting a group of board directors and executives to be able to build a working relationship and to trust together, to be able to function and to be able to really stretch each other. That's where then you start to get all types of challenges. We often say that the best boards and executive teams, they have this virtuous cycle of challenge, debate, respect, and trust. We find really good boards and executive teams are very comfortable stretching each other. So the quality and level of robust debate is quite significant. But when you have a situation, and I suppose, give an example, the most common problematic board of directors is where you have an overly dominant CEO and the CEO doesn't really want to challenge and debate.
They don't appreciate their feet being held to the fire. Obviously, when you're in the stock market or corporate board, in a lot of cases, they know they have no choice and they'll get along with it. That doesn't change the fact that they don't really welcome the challenge and debate. And in those particular cases where a CEO who on paper works for the board of directors, but is really dominating the boardroom. The first person I always looked in that situation and is the board chair.
The board chair leads the board of directors. The CEO works for the board chair and the board of directors. So when you see that type of dynamic. You'll often recognize then that either the chair is too close to the CEO or that the chair just isn't strong enough to actually lead the board.
And what happens, of course, in that type of situation is that the non exec directors get more and more frustrated. That they can't really challenge the CEO properly. CEO and the other executives don't really respect their role. And you start to get then a vicious cycle of a lot of unhealthy tensions and conflict, and sometimes when you see board directors step down from a board and you say, God, they're only on that board four years. They have another five years to go. Why are they leaving? Sometimes it's they've just given up at that stage. So that's a particularly common problem.
Other types of problems then are where you just don't have the firepower on the board. So you have non exec directors who on paper have the experience, CVs look very impressive. But the caliber that's there, the mix of expertise around the table, the amount of value that they have to add, isn't good enough.
What often happens then is the executive team starts to get very frustrated. That we don't have a board who's strong enough for added value. Sometimes you see boards that, haven't been refreshed in a long time and have gone very stale. And one of the other interesting things that happens, Ralph, and this is just human nature, is I've seen over the years, some really strong, independent, non exec directors who start on a board and the first couple of years the fire really is in the belly in terms of challenge, debate and it's suddenly over the years to just start building a really good relationship with the CEO and the executive team and they've suddenly been in the trenches five, six years and suddenly then the blade of independent, robust challenge starts to dull a bit.
That's where we just find where sometimes the non exec directors have gone native a bit with the board. And that's why one of the recent trends is you're starting to see boards being refreshed and people not waiting for someone to have served their nine years on a FTSE or AIM board, for example.
And a very wise board chair recognising that there's times where you generally need new blood. And you use that opportunity sometimes to add specific expertise onto the board, whether that's technology and AI and ESG and HR and all of those type of areas.so it's interesting that there is quite a wide range of, problematic type boards.
We've evaluated hundreds of boards at this stage and when we look at the research around the world, we actually find that only one in five boards fall into the category of high performing and strong boards. There's about a third that would be average, functional, and there's probably about 20 percent that are mediocre, dysfunctional, in any case, do not excel for the shareholders.
And another interesting thing we find is that the experience of non exec directors is no guarantee of their performance. Some of the boards that we've evaluated and we've given a very challenging rating of ineffective. or dysfunctional, for example, have had incredibly experienced non exec directors on the board, and a lot of the non exec directors find that feedback quite challenging to get.
[00:19:44] Ralph Grayson: Let's bring that into today's boardroom then so we've got Trump with yet another series of executive orders, with the old bonfire of the acronyms, so DEI, ESG, what's driving that agenda and what impact do you think that's having on what board members are having to think about at the moment?
Let's try and imagine ourselves in the BP boardroom at the moment with Elliot as an activist, suddenly going on the cap table and the share register. How should that change the way a NED thinks about their role.
[00:20:13] Kieran Moynihan: To be honest, Ralph, I think any of us who've, worked in the board and governance area over the last couple of years and have seen just how hard it was to progress the ESG, DEI agendas, you know, there was a lot of regulators and governments and institutional investors really had to work hard to change the kind of makeup of a lot of boards and really push the critical, important agendas in climate change, in DEI, in gender, diversity and representation on boards. It's absolutely frightening how many corporate boards in the U. S. have suddenly, literally overnight, abandoned all the incredible DEI and ESG commitments and initiatives that they had made to great fanfare over the last couple of years and suddenly overnight literally have thrown them all out the window.
For me, when I see that, I immediately think about the moral compass of that board of directors and its core values. While at times, the whole area of ESG and DEI did become overhyped and was a bit, probably too puritanical at times.
[00:21:29] Kieran Moynihan: At its core, the values in there are really important and decent, it doesn't matter what country you are in the world. But I think the fact that so many corporate boards, unfortunately, which surprised me all the more, aided and abetted by some of the world's largest institutional investors, aligning with the Trump sentiment about, let's get rid of all of these, they're holding us back.
I think what a lot of Trump is doing ultimately is trying to undermine regulators, undermine the standards of corporate governance, ultimately with this mission of, really bringing capitalism back to where Trump and others think it should be. And that's an extremely free unregulated markets where the commitment to do the right thing and decency and values like that, are out the window.
[00:22:21] Ralph Grayson: I'm just thinking about Goldman Sachs announcing that hitherto they'd said we won't advise or list any company that doesn't have a diverse board and now they've turned around said well that race is largely won, right? The mission is done, it's got a momentum, it doesn't need any more help from us or lends from us.
You've been doing this a long time, what's changed in terms of that North Star, the mission that you alluded to there? Let's just touch on diversity. Where do you think that has got to?
Is it now embedded in every boards thinking? Is it like, B Corp certification was the thing that a board wanted to have two years ago. Now, I turn to younger board members and I'll say, no, no, no, everybody should be B Corp certified now. That's a given. There's no need to push that agenda anymore.
So are Goldman reflecting the way boards are now thinking? Or are they reacting perhaps, shall we say, more commercial influences?
[00:23:13] Kieran Moynihan: Yeah, it is fair to say that in terms of you look at board diversity and DEI and ESG, there has been a lot achieved in the last couple of years. So we work all across the world. And now it's really unusual to see boards that are not diverse, right? I suppose what I would worry about is that I still don't think they're fully embedded yet to the point where what's happened with the likes of Goldman could undermine that.
I was really dismayed to see Goldman's statement, because they're going to encourage a lot of other institutional investors and leading,world financial and corporate entities. While their statement is, on the surface, almost celebrating the progress of ESG and DEI and things like that.
I think it's an extremely clever way of masking what's really driving their approach is to really align with the prevailing strong winds in the U. S. market.We here in Europe, I think we all feel that Trump 2.0 is just fundamentally going to change the order of how public life, business life, politics, and people all work together in the US and I think unfortunately in a very troubling direction.
It's a huge pity to be honest.
[00:24:42] Ralph Grayson: People, Purpose and Profits, right? Getting that balance right.
[00:24:46] Kieran Moynihan: Yeah. and just coming back, Ralph, as well to, I always think that when you look at all the various efforts that have been made in ESG and DEI over the years, and at times there's very sophisticated kind of descriptions of those, but ultimately you can boil it all down to what I always say to boards of directors about ESG and DEI in all these areas.
It's ultimately just decency to do the right thing.and that's where you come back to, the true moral and compass of a board of directors and the executive team who are driving the organisation day to day. For them as individuals being able to look in the mirror to say that, we have a really highly ethical, decent organisation that does the right thing in terms of our employees, our customers, our stakeholders, our suppliers and shareholders.
[00:25:40] Ralph Grayson: Let's just examine that from an individual or personal perspective. So, when we meet aspiring NEDs who perhaps left very senior, successful executive careers and say, for whatever reason, I now want to be a NED or join a board or have a plural career going forward, we begin with a psychometric assessment and we use that to force people to look themselves in the mirror and say, not only why do you want to be a NED but are you really cut out to be in a boardroom? Just touch on this theme of personal and boardroom behaviour a little bit more, will you?
[00:26:16] Kieran Moynihan: Yeah, one of the interesting things I find,when I see first time non exec directors who in many cases have been quite senior and experienced executives. One of the first, I suppose, challenges they find is suddenly to realize that they are non executive. And sometimes for a lot of quite strong executives, they sometimes find it takes a little bit of time to calibrate, and we always talk about the kind of golden rule for boards of nose in and fingers out. And first time non exec directors suddenly realize what that means.
[00:26:52] Ralph Grayson: The Goldilocks scenario I think I've heard you talk about in the past.
[00:26:54] Kieran Moynihan: Yeah, and that understanding that they are not executive, right? The other thing then that they find as well is finding your voice in the boardroom. Because it's an intimidating place. That if you join a board of directors and say, for example, there are six or seven existing non exec directors on the board.
There's a couple of executive directors on the board and some of the other management team are in there and you suddenly have 12, 14 people around the table and just finding your voice. And I always guide inexperienced non exec directors, particularly when they're joining kind of a larger type board, to just for the first meeting or two, just to really listen and just get a feeling for who they have around the table. And they'll see that there's a mix. There's always a mix in boards of the more louder kind of people who will always get their views in first. You'll see some quieter non exec directors who sometimes are the sharpest people in the room, who are quiet.
And you'll often find a board chair would ask them, that Ralph, I'd really appreciate your perspective on that. So,there's an interesting kind of people equation in a board as well of all the different personalities and egos. After that first one or two meetings, where you've really been in listening mode, it's time then to start contributing.
So if you're on a board, you need to contribute. It's not that you need to contribute on every single topic and agenda item, but you really need to be an active board member. And I suppose another key piece of guidance then for new non exec directors is it's so important to be really well prepared for the board meeting or the committee meetings.
So in terms of the board packs, the committee packs, and sometimes you're looking at a board pack and it's 300 pages and you're thinking, my God, today's going to take me five hours to read that. But it's really important. When you're joining the board, then that first couple of months, you work hard to build an understanding of the company, the organisation, and in particular, what's really important.
And in time then building the relationships both with your fellow non executive directors and the chair, but also with the CEO, the CFO and the other executive team members. So, that first couple of months, six months in particular, are an important time just to find your feet, but also build towards a point where you need to start contributing.
[00:29:22] Ralph Grayson: It's a blunt question. How often when you're doing an appraisal do you think, that NED just shouldn't be in the boardroom? They just don't have the right DNA to be here. And follow up question to that is, what can a new or aspiring NED do to make sure that they've done the right personal training and development to make themselves ball ready?
[00:29:43] Kieran Moynihan: So sometimes we see, either first time or inexperienced non executive directors who haven't sat with them and interviewed them and just watched them in action when we just come to a view that we don't see them being a strong non exec in time. Because you can see the attributes of a strong non exec director and you can see the kind of foundation even in an inexperienced non exec director.
You just can see the foundation there that over time they will grow into it. And I suppose a big thing that we always think about when we think about non exec directors as well it's just their overall judgment, and their overall sense of where things are at. Really having a good feel for where the performance of the company is at.
And I always think a very interesting question that we pose to non exec directors is, what are the three vital few items for this company? If you were to cut down to three things right now that are the most critical for this company, what would they be? And I think that overall judgment, is absolutely critical because when you understand those, that's then where your value that you can add both in terms of really intelligent and at times robust debate and challenge with the executive team, but also helping them with your guidance and expertise.
And we always think of non exec directors as well having, two sets of expertise. One is the sector expertise that they have, and some non execs have worked across multiple sectors and are very good generalists. But there's a second set of softer skills then, and influencing and listening and getting that tempo right. You can ask a CEO who's under serious pressure a question in two different ways. One could be just absolutely really aggressive. That's going to make a CEO who's stubborn to begin with even more defensive. Or asking a question a different way where you say, listen, we can really see that you're struggling in this area. It's really difficult and complex. We as a board are struggling to get our head around as well.
So, can you walk us through your sense of what are the kind of underlying factors? What could we as a board and executive team, how can we help you just to identify a path forward? That whole judgment, listening skills, and just feeling. We always talk as well about non exec directors today, and particularly when they're starting, we really highlight to them the importance of emotional intelligence, because it's a people environment around the table and the best boards will have a lot of healthy tension because this is serious business. Everyone in there in the board table has their role and responsibilities. It's a tough, challenging environment, but we find even inexperienced non exec directors who have very good people intelligence, emotional intelligence, are able to adapt. And that helps them then grow in their contribution.
[00:32:44] Ralph Grayson: I think I've heard you talk in the past about the partnership model. So let's move from the individual to the team how does that orchestra get the right tune?
[00:32:53] Kieran Moynihan: Yeah, I was given an analogy, I was given a workshop recently to a large bank, an international bank, and their board of directors and the executive team. And I gave them the analogy, actually and I put up a big picture on the screen of Torvill and Dean doing their Bolero routine in Sarajevo in 1984, which is just over 40 years ago, when they became absolutely the world's best with the highest ever score in the figure skating Olympic final.
And I explained to them that in that routine, the two of them there, how they achieved that brilliant outcome, is that they were brilliant individually in their parts of the routine, but when they came together, they were just exceptional and phenomenal. And I often laugh when one time I saw that Torvill and Dean had been interviewed, and they're talking about how at times you drive each other crazy in training. Just trying to get the best. And for me, it's an exact analogy for a board and an executive team that what you want is for them individually as an executive team to be exceptional, for the board to be exceptional, but for the two of them, then how they work together, and how they get the best out of each other.
And what I find is that at the core of that partnership model is when you have a CEO and the executive team who really understand the role of the board, who really respect the board and want to get the best out of the board. Not to say at times the board doesn't drive them crazy, right? And really, hold their feet to the fire.
But when you have that at the foundation, that allows the board then to do their jobs properly. And again, come back to that balance of really strong oversight and challenge and holding their feet to the fire and excellence and governance and risk and internal controls. But when the executive team are incredibly open and honest, brilliant reporting, so that the board for better or for worse know exactly where everything is, that then frees up the board's energy and time to add a lot more value, and it inspires the board.
So as part of our board evaluation process, we observe the board and committee meetings, and when we see the best boards and committees in action, by God, do they get at it. There's a real spirited give and take.
They really stretch each other, very healthy tensions. But what you can see around the table is that nobody's taking it personal. All that matters right now in this boardroom table is how do we make the best decisions and they really stretch each other. And people's, tensions are quite high. but sometimes for a lot of complex decisions, such as business models, strategy shift, and things like that, the board and the executive team really need to go deep into the well to really figure out, explore, challenge assumptions, have contrarian, left field thinkers, devil's advocates and things like that.
And that's when we see boards and executive teams at their very, very best. And it really is like Torvill and Dean out on the ice. Absolutely brilliant together, getting the best out of each other, but realizing that for them to excel as a couple, so to speak, both of them have to excel in what their part of the routine is, and then together.
When we see that, it's just magical.
[00:36:17] Ralph Grayson: So if we pivot the analogy from Torvill and Dean to an orchestra, we'll talk about the Board Skills Matrix needing the right blend of skills, experience, and knowledge. What are the key skills you see missing on boards as of today, and for a new and aspiring NED what are the key skill gaps that people can go, yup, I solved for that, I should apply for that role.
[00:36:42] Kieran Moynihan: The most topical area at the moment that a lot of boards are struggling with is in the whole area of technology, digital transformation, cyber risk, artificial intelligence has now leapt to the front of so many board agendas around the world that a lot of boards just do not have any expertise in this area.
You know, when you think of the vast majority of large organizations now, their entire backbone is digital, is technology. And a lot of times you have boards overseeing executive teams who are making major bets on digital transformation, new products, all sorts of things like that. And the board really doesn't have the depth of expertise.
I think the second area. That we're seeing,interest in as well is board directors who have a strategic mindset. So we see a lot of quite good non executive directors, who are fantastic at oversight, really strong in sales, operations and things like that.
But when you look at strategy, business model, innovation, oftentimes they're not great at that area. And what we're finding at the moment is that strategy for any company, organisation around the world has never been more difficult to develop. And we're seeing a lot of executive teams, more and more put their hand up and say to the board, we need help.
There's a lot of experienced people around the table here. We're struggling. Our competitors are wiping the floor with us. They've changed their pricing model, their delivery model, whatever it is. The ecosystem is changing. Our customer requirements are changing. We're really struggling strategically, and we're seeing a lot of boards of directors who do not have the strategic firepower.
And it's not just sector expertise. It's actually strategic thinkers who can actually look at business models and look at, say, an adjacent type of business and say, could we look at this model here? So I think that's another interesting area for aspiring non exec directors. We're finding now non exec directors who are, say, starting off now in their, say, forties, for example, and early fifties. They're a lot more digital savvy than say some of the older non exec directors. So that brings an important dimension to their skill set, but also that just innovation strategy business model type area.
And the third area that we're seeing, an interest in as well is board directors who understand people, employees, culture. And can help organizations with, in some cases, transforming their culture, and having non execs on the board who really have a deep, progressive view to employee retention and areas like that. So that's another interesting, set of softer type skills that we're seeing, new non exec directors can bring to the table. Because we see so many non exec directors, you know, who have a standard financial services background skill set, which is great and important.
But that's not going to help them stand out from the crowd. I had a conversation two days ago with, a very experienced, CEO, whose company was acquired has now kind of retired from executive role and is looking for their first non exec director roles. And we were having a conversation, I was saying to him that the amount of non exec directors now looking for each position has never been greater.
So the competition to be a professional NED You have a lot of other people in the lanes alongside you, and if you're going to really differentiate, it's not only in skill set, in that your sector expertise in financial services, or engineering technology background, but it's also a lot of those softer type skill sets, I think could be the key for a lot of aspiring non exec directors.
[00:40:47] Ralph Grayson: I think it's really interesting, certainly I'm seeing our NOMS committees in particular, people coming from more of an HR background who understand that emotional, part, and often culture. So I think that opens a lot of opportunities, for people.
Similar to the composition of a risk comittee. We should maybe touch on that for a second. So risk has come very much to the fore, risk defined in its broadest sense. How has the interpretation and the management of risk changed, both from a corporate governance perspective, as well as an individual perspective over the last few years?
[00:41:17] Kieran Moynihan: Yeah, I think it was interesting how prior to COVID 19 risk management was a very, steady conservative approach of a typical approach for organizations. You built your risk matrix, you did your assessment and you monitored and you had your mitigation plans and things like that. I think COVID 19 actually, has brought in a whole new era of risk management, where the risks now being considered are far broader. And what were considered risks before that had such a low level of probability, there's a different mindset to those now.
So in recent board evaluations I've been doing. One of the biggest risks up that the board is thinking about is geopolitical risk. Trade wars. Trump 2.0. I'm now seeing on risk registers Trump 2.0. But what also then people are suddenly thinking about people risk, employee retention risk in a far more sophisticated way than they did previously.
Obviously, another big risk area at the moment is artificial intelligence. There's a lot of, organizations now suddenly thinking about the risks of us lagging behind our competitors in terms of AI adoption. Have we employees and departments in our company who are using very advanced artificial intelligence that we don't know about and suddenly are putting in biases towards certain ethnic backgrounds, all sorts of things, and creating a whole new type of risk for the organisation.
What we're finding is that risk committees themselves are starting to evolve and they're looking for different type thinkers. Before what you would normally see on the risk committee is the best finance people, basically, because they were all primarily financial related risks. But we're seeing now the best risk committee is being far broader. Far more holistic, and they're thinking about all different dimensions of risk in a way that you wouldn't have seen five years ago.
[00:43:24] Ralph Grayson: Clearly we're seeing a trend of public companies delisting. Private companies staying private longer and, being much larger in terms of market cap. Perhaps in many ways, taking on the manifestations of public companies whilst remaining in either P.E or private ownership. How does an aspiring NED think about the difference of, should I join a Private board or Public board. Historically, it was very much a presumption that I would join a Public board if I've come from an executive career. I think that dynamic's completely changed.
[00:43:57] Kieran Moynihan: We're seeing some outstanding non exec directors now who, if they have a choice, would join a private board far quicker than a publicly listed board. And I think both here in the UK for the FTSE and AIM, and then stock exchanges around the world. I think there's a dawning realisation for both the existing non exec directors on PLC boards and aspiring non execs who want to join PLC boards. That the role and responsibilities has just increased to such a level that no matter how much compensation you're getting, there's some public list and non exec director said it's not worth it because the regulation has increased significantly. A lot of very good board directors, very conscientious board directors who in some respects are suffering a bit from increasingly onerous levels of regulation in response to all different scandals and destruction of shareholder value and all what's happened over the years, both here and across the world.
In every country, a lot of boards have failed, a lot of listed company type boards and had all type of scandals. So that has really changed, the environment to be a PLC board director.And I suppose I always highlight to non exec directors that a good non exec director could work in any environment, whether it's a PLC or a large PE type environment, but just the understanding that serving on a listed company board, there is a whole extra set of dimensions that come with that.
And it's not just things like market abuse rules or insider information and things like that. It's just the realization as well that, as a listed company, you have a very wide shareholder base and you have some very large institution investors. And you have pension funds and you have small investors. And there, is an additional layer of responsibility to all of those shareholders for how the company acts and behaves and its decision making that is different compared to an extremely mature, PE backed company, very strong board of directors, executive team, very clear operating model. And while the role, in many respects, is quite similar, I often would say to aspiring non exec directors, if they could, I would advise them, to focus their first roles on private type organizations, to build their capabilities and experience.
Because I think the bar for serving as a listed company director board in the UK and internationally has gone higher.
[00:46:47] Ralph Grayson: Certainly when I'm talking to people, I try and impress on them, have you thought about the reputational risk, particularly if this is your first board role? And quite often people blink at me and say, I don't quite know what that means. Second question then is, have you asked about what the DEI insurance is? And that gets an even bigger blink.
[00:47:03] Kieran Moynihan: Yeah. I always explain to non exec directors as well, is that in the digital world we're now living in, that once you sign your name to be a company director, no matter whether it's a PLC or a private equity, a family business, or a charitable organisation, you are forever going to be connected to that company.
And God forbid, there is a serious scandal or collapse or that organisation has lost its way or whatever like that, then you are inextricably linked to that organisation and to the reputation. And I've seen cases where a board of director was just unlucky in one of their first or second board roles.
There was a serious scandal or collapse at that organisation and it did influence or impact on future board roles. And it took a while for them to recover from that.
[00:47:57] Ralph Grayson: Yeah, I think this is something that a lot of people don't give enough due diligence to. It's a bit like when we tell our kids, careful what you put on your social media, right? A lot of first time NEDs think, well, I could just resign, I could just leave the board. In the NED world, the board world, everybody is going to take references everywhere on you.
And that's going to come back, and whether it was on your watch or not, and whether you were in the heat of battle or not, the reputational risk will link,
[00:48:25] Kieran Moynihan: Absolute, and, you kind of mentioned for first time NEDs one advice that I would always give them as well, and you've alluded to it there, Ralph, is the importance of their own due diligence. At times, particularly for a first time NED, they're really excited that they have an opportunity to secure a board role that they feel would be a great foundation for future board roles.
But I was really impress upon them, the importance of really doing their homework, of really understanding, both the organisation, who's serving on the board, and I always say to aspiring non exec directors, you always need to meet at least the following three people. One is the chair of the board who you're going to be working for as part of their team. Second is the CEO and third is one of the other non executive directors, ideally as independent as possible. And you just sit down and ask them, what's this board like? How does it work? What's the relationship? The dynamics or whatever like that. But the other thing as well is to really do your research on the company or organisation itself in terms of its values.
And that if you bumped into people in the street and asked them, listen, you're a customer of this organisation or whatever, how do you find them? Because sometimes non exec directors who do that properly suddenly realize that, listen, I met the chair and I met the CEO and I was doing my kind of desktop research. And to be honest, I'm not sure my value set is a good fit here with this organisation. And I always say in that particular case, you're better to pass it because there will be other opportunities.
[00:50:00] Ralph Grayson: I couldn't agree more. Whilst we've been touching on private companies, I can't resist just coming back to one of the great slides you have in your presentation, is Yoda sitting there with a young Skywalker in the swamp. So a picture tells a thousand words. Sadly, we're on a podcast and we probably don't have time for a thousand words, but just touch on what that means in terms of the role of a board member with perhaps a Series A, Series B scale up company and the founder.
[00:50:29] Kieran Moynihan: Yeah, it's, we spend a lot of time helping, series A, B, C type companies. You know, we've done board evaluations for the likes of Revolution here in London and Stripe in Europe and other organizations. So, we work with founders quite a lot. And the reality is, Founders find their boards challenging.
It's such a switch to suddenly have to be accountable to the board, the board hauling you over the coals for your mistakes, suddenly have to get the board approval for everything, that it can be really challenging. And I suppose when they highlighted kind of Yoda giving a dose of salt to the young Jedi, Luke Skywalker, it was really highlighting as well the chair CEO relationship in a growth type company.
And that, the chair in that particular environment, you know, does give a lot of support to the CEO and encouragement. But there's times as well where the chair has to be tough and be brutally honest with the CEO, particularly in helping them work well with the board. Because sometimes I see founders, CEOs who really struggle with their attitude to the board and they're in the board meeting and the non exec directors are really asking the hard questions and they find it very difficult and just incredibly stubborn and defensive.
You know, in a lot of cases, they're young, they have very little management experience. The boardroom is a completely different type of environment or whatever like that.But I suppose when I look at the growth companies, that have made it and have really grown and attracted multiple financing rounds and had great exits.
They had boards with Yoda type figures on them, both the chair, but other non execs as well, who really were able to build the trust and the relationship with the founders and the executive team to be able to have those at times brutally honest discussions and help the founder and the executive team to realize that all of the investors around the table, all the non exec directors, they're only going to win if the executive team wins. And while that might seem blindingly obvious to a founder CEO who finds it difficult to work with their board, it is not as obvious as you think.
And that's for us, the key that anytime we see, growth companies that seem to be stuck at series A and they're doing 5 million revenue, 10 million revenue and it looks a very promising company and you come back 15 months later, they're still doing 10 million revenue.
They really haven't attracted new capital. Oftentimes I slap the executive team. I look at the board. And say, how strategic, how strong is this board and how much value are they adding to help this executive team? Because the reality Ralph, I find is in growth type companies, the board does have a bit more of a hands on role than a traditional corporate type board.
The executive team are still driving the bus, but they're so inexperienced from a management point of view, brilliant technology, brilliant experts in their areas, but they need a lot of support and guidance as well. And the founders who I think have the wisdom to build really good boards and attract the type of people who are going to stretch them, they're the founders who make it.
[00:53:54] Ralph Grayson: there's some great work on this, particularly by one of the partners at Mercia, about the link between valuation, the quality of advice a founder has, and actually how many board meetings a founder's going to have, before they're thinking about an exit. I think 80 is the magic number.
So it's interesting that, historically, aspiring NEDs were often advised, go and join a school board, join a not for profit charity. That's the way you learn about governance. We're going to do a future podcast with, the founder of Connectedand for founders seeking capital on the Connected platform.
They have a large bank of Advisors, NEDs, Board Advisors, whatever title we want to give them. And it's becoming much more of an integrated, I think offering now for pre Series A companies,to really think about first time and aspiring NEDs cutting their teeth and learning how to give good advice in the right way, influence, not management, right?
As a way to learn about governance and learn to be an effective board advisor. You're nodding furiously. So, so you see that as a as a good way to cut your teeth and learn your trade.
[00:54:55] Kieran Moynihan: No, absolutely. Because particularly for experienced executives, they have so much value to bring to a young, inexperienced funding management team. I do think it's important at the same time that they're careful around the stage of the company in which they're joining. If you're a kind of first time non exec, the last thing you want to be doing is joining a growth company board, and they've run out of cash four months later.
So, just coming back to the due diligence part as well, you know, and I always say to aspiring NEDs that, I would be a great advocate for joining a growth company board, but they should have a minimum of 12 to 18 months cash runway, and that, again, you spend serious time with the CEO and the founder.
To get a real sense of, could I work with them? And I always think a very interesting question when an aspiring NED should meet with the CEO is the single biggest question they should be looking to answer is, will this founder take advice?
[00:55:56] Ralph Grayson: Yeah, in particular, I'd also. encourage listeners to think about joining advisory boards, which perhaps don't go with the same reputational risk and, governance issues,as a formal board member. And if anybody's interested, Ollie Cummings at New Roll, on his podcast has been developing a theme of the idea of pop up boards and advisory boards to solve for a particular issue for a particular founder at that moment of time.
So, so again perhaps a bit of wider perspective people might want to think about. So let's try and pull this together. What's the listener take from our discussion, and how does our aspiring NED maximise their chance of a board seat?
[00:56:32] Kieran Moynihan: Every day, literally both myself and my team. We're observing board and committee meetings in action. And I think the key thing, is for aspiring non execs is to really understand your role and what makes for a great non exec. It's that balancing of holding the CEO and the executive team's feet to the fire, even sometimes when they don't want their feet held to the fire, and you can have very strong characters in the executive team, but being steadfast and resolute that's my role, as an individual and as a collective board to oversee the performance of the organisation, its health, its finances, its risk management. But then balancing that with really adding value, support and helping the executive team to excel. Because if your executive team excels, then the board and the executive team together are in a great position as the stewards and drivers of that company.
At the end of the day, around the board table, you have 11 or 12 individuals between the non execs and the executive team and how they work together, how they get the best out of each other. And at times, that's going to be tough. You're going to be in The Zone of Uncomfortable with a lot of healthy tensions and sometimes conflict, but sometimes that's what's needed to make the very best decisions and what often are complex choices.
[00:57:53] Ralph Grayson: Fantastic summary, thanks Kieran.
I know you've written some great content on LinkedIn and you've got a fantastic blog. So if anybody wants to follow up with you or find out a bit more about Board Excellence,
[00:58:03] Kieran Moynihan: Yeah, if you go to our website, board-excellence.com, or if you look for me on LinkedIn, I love sharing, I suppose, our experiences of helping boards, and, celebrating positives, what the best boards like, but also, I suppose, sharing a lot of the challenges we see, in boards and directors that, that struggle.
So, delighted for any of the listeners to follow up with me and, or follow up with any of the articles.
[00:58:29] Ralph Grayson: Kieran, thanks so much for putting us into your hectic schedule while you were in London. It's been an absolute pleasure, thank you so much.
[00:58:35] Kieran Moynihan: Thank you.
[00:58:35] Ralph Grayson: I hope that you've enjoyed listening to this podcast and have found it helpful when thinking about how to approach your own path to the boardroom. If you would like to push this a little bit further, Sainty Hird runs a bespoke one to one programme designed specifically to this end. For more information, please visit our website, saintyhird.com, follow us on LinkedIn, and subscribe to the Boardroom Path to receive new episodes. Thank you for listening.